Apple has turned into a cash-producing machine investors should not ignore

“In my last article, I talked about Apple’s destiny as a Dividend Aristocrat,” Michael Foster writes for Forbes. “The company doesn’t have even five years’ worth of payouts under its belt, but there are clear indicators that it will never struggle to pay dividends.”

“The company’s strong—and rising—free cash flow and its operating margin, which has surged over the last 20 years and stayed at historically high levels, indicate that Apple has turned into a cash-producing machine investors should not ignore,” Foster writes. “Ironically, many people don’t see Apple as a cash machine when they buy or sell the stock; instead, they obsess over iPhone and iPad sales. This leads to a panic when these sales are weak and euphoria when they’re strong.”

“But this short-termism is destined to lose because buying and holding Apple will mean collecting a dividend that will grow faster than those of supposedly ‘safer’ and more boring stocks like General Electric, AT&T, Johnson & Johnson, Chevron, Consolidated Edison and Exxon Mobil,” Foster writes. “Yet Apple is the cheapest stock among this group when we look at its price-to-earnings (P/E) ratio.”

Read more in the full article here.

MacDailyNews Take: As Jim Cramer says of AAPL, “Own it, don’t trade it.”

12 Comments

  1. Tim Cook is an idiot who worries too much about minority groups and special interests. I don’t care if he was Jobs’ 3 hire in 1997 and his choice to run the company. I don’t care, as most investors don’t, that the stock has been a great investment over time. He’s just got to go cuz my iMac is getting creaky.

    1. Speak for yourself stooopid, most Apple investors are die hard users and are in for the long run. Oh, and all richly rewarded in every way since the beginning.

  2. The problem is the “resistance” in this country, aka, the democratic party, is going to likely begin impeachment proceedings on D. Trump once they dig up enough connections to Russia..when that happens the market is gonna get CRUSHED, and AAPL is going down with it..that’s the risk.

    1. My friend, you are brainwashed by the media!….lol The Dems started this smoke and mirrors before the election to pivot the news away from what they have done and what their leaked emails said, etc. I used to watch only CNN and was a Dem until watching both sides this year and seeing just how dirty the left was and was blinded all these years. The fluff and smoke over the Russia stuff is just that! They need more votes next time around and the goal is to do whatever they can to make Trump look bad, whether they have to fabricate it or not. Stop watching CNN and MSNBC is the first step!

      1. I’m with ya, I’m an old school liberal who thinks Hillary is as corrupt as Boos Tweed, and this new form of “Neo-Liberal” is extremely dangerous, intolerant, and violent. I watch both Fox & CNN, and what I’m saying is that it really doesn’t matter what the truth is, the witch hunt is very real, and they won’t need much evidence to bring on impeachment proceedings, because they have a rather large united front of hatred for D. Trump. Perception is reality. I give them at least a 25% chance of bringing impeachment proceedings coming from whatever “evidence” they dig up.

        1. Impeachment is started in the House.
          It will never happen unless there is a real crime, and the only real crimes were done by Barry and Hilary along with State, DOJ and FBI/CIA/IRS. All this Russia BS is just to cover their asses until the public ‘forgets and forgives’ the former administration.

          The media should be publicly flogged for intentionally misleading the public for monetary gain and power in helping the Democrats.

          Hopefully media again will be made to look like fools after this passes.

    2. In that scenario, AAPL is probably going to do better than most. During market turmoil like during the financial crisis, AAPL actually tracked “safe have” asset prices such as gold. Most of the time AAPL does relatively worse when the overall stock market is doing well. Right now is a bit unusual.

  3. I think Wall Street would rather continue stroking the FANG stocks than bother with Apple. Every article I’ve read about Amazon say the sky is the limit. Everything Jeff Bezos does is said to be a genius move. AWS supposedly has no competition and the Echo is supposedly the most sought after product by every single consumer. I swear that Amazon has to be the most perfect company in existence.

    And also look at Microsoft with a P/E of almost double Apple’s. Wall Street thinks there’s more than twice the value in Microsoft than it does Apple. Investors are happily paying a high premium for Microsoft. I really don’t see Apple getting any respect from Wall Street like those FANG stocks do. I’m grateful how Warren Buffett has been helping boost Apple by word of mouth and if it wasn’t for him, Apple would be totally ignored by the Street. Almost no one wants to challenge Buffett’s stock picks.

  4. I don’t know- Apple’s dividend yield is only 1.63%. Stocks like Altria (3.21%), P&G (2.94%), Chevron (4%), and AT&T (4.66%) all have better yields. There are better options for buy-and-hold strategies, at least for long term plays, with companies that pay out higher dividends. There are better options for short-term plays with company’s that are more volatile.
    The article states that Apple is a “cash machine”- that’s nice, but if the cash isn’t going back to the investors, why does that matter? Cool, the company is positioned well to buy anything they want, has plenty of reserves to fend off any lawsuits, etc.. But again, the relatively low dividend rate makes the stock much less attractive to someone like me who wants to truly “buy and hold” for years and years.

    1. Yes probably better dividend yields but how is the stock doing. With aapl I have 1400% growth in 11 years. That includes dividend reinvestment which has increased my share # by 10% over 5 years.
      So dividends can be great income and a good way to grow your investment. But it usually can’t be a good growth stock.
      As with all stocks there is risk. At this point it is worth it but probably I will sell if aapl becomes overpriced.

      1. I think you have spotted the hidden reason for the run up in APPL since the election. Insiders (cough Buffett cough) smell a tax repatriation deal and it will likely include a significant, one-time dividend payout.

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